Facebook CEO Mark Zuckerberg, discussing his company's purchase of Instagram last year, is taking a long view with the WhatsApp purchase.

Photo: Lea Suzuki, The Chronicle

Facebook CEO Mark Zuckerberg, discussing his company's purchase of...

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Screenshots of Whatsapp's mobile chat app for various platforms.

Photo: Whatsapp

Screenshots of Whatsapp's mobile chat app for various platforms.

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Screenshots of Whatsapp's mobile chat app for various platforms.

Photo: Whatsapp

Screenshots of Whatsapp's mobile chat app for various platforms.

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Screenshots of Whatsapp's mobile chat app for various platforms.

Photo: Whatsapp

Screenshots of Whatsapp's mobile chat app for various platforms.

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Screenshots of Whatsapp's mobile chat app for various platforms.

Photo: Whatsapp

Screenshots of Whatsapp's mobile chat app for various platforms.

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An illustration photo shows a man holding a smart phone with a Facebook logo as its screen wallpaper in front of a WhatsApp messenger logo, in Zenica February 20, 2014. Facebook Inc will buy fast-growing mobile-messaging startup WhatsApp for $19 billion in cash and stock in a landmark deal that places the world's largest social network closer to the heart of mobile communications and may bring younger users into the fold. REUTERS/Dado Ruvic (BOSNIA AND HERZEGOVINA - Tags: SCIENCE TECHNOLOGY BUSINESS)

Photo: Dado Ruvic, Reuters

An illustration photo shows a man holding a smart phone with a...

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Logo of WhatsApp, the popular messaging service bought by Facebook for USD $19 billion, seen on a smartphone February 20, 2014 in New York. Facebook's deal for the red-hot mobile messaging service WhatsApp is a savvy strategic move for the world's biggest social network, even if the price tag is staggeringly high, analysts say. AFP PHOTO/Stan HONDASTAN HONDA/AFP/Getty Images

Photo: Stan Honda, AFP/Getty Images

Logo of WhatsApp, the popular messaging service bought by Facebook...

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A news ticker announces shares of Facebook are declining ater it annouced it's acquisition for WhatsApp, on Times Square in New York, February 20, 2014. Facebook announced its largest acquisition ever, saying it would pay at least USD16 billion for WhatsApp, a text messaging application with 450 million users around the world who pay little or no money for it. The ultimate cost of the deal could rise to USD19 billion, with WhatsApp employees and founders receiving an additional USD 3 billion in restricted stock units. AFP PHOTO/Emmanuel DunandEMMANUEL DUNAND/AFP/Getty Images

Photo: Emmanuel Dunand, AFP/Getty Images

A news ticker announces shares of Facebook are declining ater it...

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Logo of WhatsApp, the popular messaging service bought by Facebook for USD $19 billion, seen on a smartphone February 20, 2014 in New York. Facebook's deal for the red-hot mobile messaging service WhatsApp is a savvy strategic move for the world's biggest social network, even if the price tag is staggeringly high, analysts say. AFP PHOTO/Stan HONDASTAN HONDA/AFP/Getty Images

Photo: Stan Honda, AFP/Getty Images

Logo of WhatsApp, the popular messaging service bought by Facebook...

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Logo of WhatsApp, the popular messaging service bought by Facebook for USD $19 billion, seen on a smartphone February 20, 2014 in New York. Facebook's deal for the red-hot mobile messaging service WhatsApp is a savvy strategic move for the world's biggest social network, even if the price tag is staggeringly high, analysts say. AFP PHOTO/Stan HONDASTAN HONDA/AFP/Getty Images

Photo: Stan Honda, AFP/Getty Images

Logo of WhatsApp, the popular messaging service bought by Facebook...

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Facebook Founder and CEO Mark Zuckerberg speaks during an interview session with The Atlantic at the Newseum in Washington, DC, on September 18, 2013. The US social networking giant's 29-year-old founder Mark Zuckerberg snatched the limelight on February 20, 2014 ahead of his debut as the star speaker on the opening day of the February 24-27 World Mobile Congress in Barcelona, with Facebook's $19-billion (14-billion-euro) takeover of smartphone messaging service WhatsApp, staking its place in dramatic fashion as a pivotal player in the mobile world. AFP PHOTO/Jim WATSONJIM WATSON/AFP/Getty Images

Photo: Jim Watson, AFP/Getty Images

Facebook Founder and CEO Mark Zuckerberg speaks during an interview...

Even by Silicon Valley standards, paying $19 billion to buy a mobile app company seems kind of crazy.

But Facebook CEO Mark Zuckerberg's decision to pay such a head-scratching premium for WhatsApp showed he was looking far beyond the usual numbers investors use to determine a company's value.

And his view of the future may include a complete reinvention of his own social network.

"Facebook right now is preparing for a world in which people care less about Facebook," said David Berkowitz, an executive of the digital marketing firm MRY. "Facebook needs to take this long view. I don't think anyone can afford to be so cocky to think Facebook will be around forever."

Facebook agreed to acquire WhatsApp for $4 billion in cash and $12 billion in Facebook stock. To sweeten the pot, WhatsApp's founders and employees will receive $3 billion in restricted stock units, which in total will give them about an 8 percent equity stake in Facebook.

Competing bid

The offer, the largest buyout in Silicon Valley history, reportedly trumped a competing bid of $10 billion from Google.

To put that in another perspective, Facebook is paying 19 times more money for WhatsApp than it paid for Instagram in 2012, more than 11 times above what Google paid for YouTube in 2005, and $4 billion more than the current stock market value of Southwest Airlines.

But the deal can't be judged by standard Wall Street mergers-and-acquisitions metrics. Normally, an investment bank will value a company based on multiples of the target's operating profit. But in the social media-driven world of Silicon Valley, users, not revenue or profit, provides a company's worth.

So what did Facebook get for its $19 billion? For starters: WhatsApp's current 450 million monthly active users, which is increasing by 1 million users per day and "on a path" to reach 1 billion people around the world, Zuckerberg said.

Marc Weiser, founder and managing director of early stage investment firm RPM Ventures, said Facebook's bid reflects how the company- and indeed Silicon Valley-looks at acquisitions.

"You justify the merger by framing it as a decades-long strategy," Weiser said. "You want to be the dominant player in mobile. And you can control the mobile industry by controlling all of the apps."

Martin Garner, a London analyst for mobile industry consulting firm CCS Insight, said Facebook was defending itself on two fronts, against being "quickly displaced by the 'next big thing,' but an even greater concern is that 'the next big thing' will be acquired by a competitor."

But Facebook clearly also wanted what the app's customers were doing every day - 19 billion SMS text messages sent, 34 billion messages received, 600 million photos, 200 million voice messages and 100 million video messages.

Younger users

WhatsApp also reaches into international markets Facebook wants to penetrate. And WhatsApp's core function, text messaging, makes it the kind of app favored by teens and young adults whom Facebook worries will slip away from the social network.

"What Facebook got was a communications platform which was beyond what they could do within their traditional social media design," said tech analyst Tim Bajarin, president of Creative Strategies of San Jose.

"What I don't know enough about is how they came up with that $19 billion valuation number, which on the surface sounds like they highly overpaid," Bajarin said. "But on the other hand, if you really look at it strategically, then it has great value to Facebook."

Bajarin, a WhatsApp user, said it offers customers a cheap alternative to paying mobile phone carriers for text messaging services. WhatsApp is free for the first year, then charges only $1 per year thereafter, "which is dirt cheap even in emerging markets."

Victor Gaxiola, a social media expert with business governance consulting firm Actiance, said in the future, WhatsApp may morph into a platform for other lucrative business services, such as booking a taxi or ordering products.

But the Facebook-WhatsApp tandem could also pose problems for mobile phone carriers, which get money from selling texting plans.

Facebook has pledged to keep WhatsApp autonomous, which for now should mean the app will remain advertising free.

WhatsApp co-founder Jan Koum has steadfastly rejected using advertising on the app. Two years ago, Koum posted "the most damning post on advertising I've ever seen and this guy gets nearly a $20 billion payout from someone who figured out the ad game pretty well," said David Berkowitz, MRY's chief marketing officer and a longtime social media analyst.